How to Claim Your UK State Pension as an Expat Retired Overseas

If you are an expat about to retire, or have already retired, and want to claim your UK state pension, you can claim from any country you reside in the world by getting in touch with the UK International Pension Centre.

Make sure you tell them about your move abroad as it is likely that if you spend time out of the UK that the government will lose track of your overseas address.

But claiming the state pension as an expat is still easy if you follow some simple steps.

What is the UK State Pension?

The State Pension is a regular payment from the British government to people who have reached the State Pension Age.

How much State Pension you receive is based on how many qualifying years of National Insurance Contributions you have amassed, including credits for time off without work, looking after a family or caring for a loved one.

The payment depends on your age and gender.

The government pays the old State Pension to expats retiring before April 6, 2016, while those retiring after that date receive the new state pension.

Someone reaching State Pension Age who continues to work or receives other pension income still receives the State Pension.

Don’t forget to find your lost UK pensions while you are living overseas. Billions in lost pensions are waiting for their owners to claim them Don’t be one of the statistics.

What is the State Pension Age?

Your State Pension Age depends on the year when you were born and is the date from which you can claim the State Pension.

Unfreezing the State Pension

The State Pension is increased to the current rate for any expat returning to the UK from a country where the payment is frozen.

Countries where the UK State Pension is uprated

Below is a list of countries that the UK government pay an increased state pension yearly:

Austria

Barbados

Belgium

Bermuda

Bosnia-Herzegovina

Bulgaria

Canada

Chile

Croatia

Cyprus

Czech Republic

Denmark

Estonia

Finland

France

Germany

Guernsey

Gibraltar)

Greece

Hungary

Iceland

Ireland

Isle of Man

Israel

Italy

Jamaica

Japan

Jersey

Kosovo

Latvia

Liechtenstein

Lithuania

Luxembourg

Malta

Mauritius

Montenegro

Netherlands

New Zealand

North Macedonia

Norway

Philippines

Poland

Portugal

Romania

Serbia

Slovakia

Slovenia

South Korea

Spain

Sweden

Switzerland

Turkey

USA

These countries are European Economic Area and Switzerland and countries that have a social security agreement with the UK that allows for cost of living increases. The USA agreement covers American Samoa, Guam, the Northern Mariana Islands, Puerto Rico and the US Virgin Islands

How much State Pension will I get?

The full new State Pension for 2020-21 is £175.20 a week, but as we have seen above, the actual amount depends on your National Insurance Contribution record.

Couples are each paid according to their individual NIC records.

The payment is only higher if you receive the Additional State Pension.

The Department of Work & Pensions issues State Pension forecasts on request – you can apply online providing you are not already receiving the State Pension or have not deferred the payment.

How much the old State Pension pays

The old state pension is worth £134.25 a week for individuals.

Couples who both have the full number of qualifying years can expect this amount each.

Couples where one partner has no qualifying years will receive £134.25 a week plus a top-up based on their partners National Insurance record.

If you enrolled in the State Earnings Related Pension Scheme (SERPS) this can increase by up to £44.16 a week to £179.41.

SERPS is also known as the Second State Pension or Additional State Pension.

Age restrictions mean no one claiming the new State Pension qualifies for the Additional State Pension unless they inherit a share when a spouse or civil partner who qualifies dies.

What happens to your State Pension when you die?

A surviving partner may inherit a regular extra payment on top of the new State Pension if they do not marry before reaching State Pension Age.

Bereavement Support Payment

A surviving partner may claim a Bereavement Support Payment if:

The deceased must have paid National Insurance Contributions for at least 25 weeks or died due to a work accident or illness caused by work

The surviving partner must be below State Pension Age and live in the European Economic Area (EEA), Switzerland, or a country with a reciprocal social security agreement with the UK.

UK State Pension qualifying years explained

When the new State Pension started in April 2016, the number of qualifying years of National Insurance Contributions (NIC) needed to guarantee a full payment changed too.

Effectively, there are two ways to calculate how much State Pension is paid, depending on the date State Pension Age is reached.

The old rules apply to those reaching State Pension Age up to and including April 5, 2016, while the new rules apply to anyone hitting State Pension Age on or after April 6, 2016.

The conditions for a qualifying year for the old State Pension were set in 1978.

A qualifying year is a tax year in which someone has built up NIC equal to or more than the lower earnings limit. NIC credits cover gaps in qualifying years due to unemployment, time out to bring up a family or caring for loved ones.

Old State Pension qualifying years

Before April 6, 2010, a man needed 44 qualifying years for the full State Pension payment, while a woman needed 39.

Between April 6, 2010 and April 5, 2016, this dropped to 30 qualifying years.

New State Pension qualifying years

From April 6, 2016, men and women have needed 35 qualifying years for the full new State Pension and a minimum of 10 qualifying years for any payment.

Gaps in qualifying years

If you do not know how many qualifying years you have, you can check online at the government web site or call 0300 200 3500.

HM Revenue & Customs may write to you pointing out you have a contribution gap

Working out pro-rata payments

Anyone reaching State Pension Age now with more than 10 but less than 35 qualifying years picks up a pro-rata payment.

The calculation involves some simple arithmetic.

Assuming you reach State Pension Age in May 2020 and have 24 qualifying NIC years, the workings are:

State Pension payments for expats

To have your state pension paid into a foreign bank account, you will need to give the International Pension Centre your bank identification code (BIC) and international bank account number (IBAN).

You can generally find these on your bank statements or online accounts – but your bank will give them if you ask.

Working out the State Pension starting amount

Expats can qualify for extra qualifying years by working after April 6, 2016 until their State Pension Age.

The value of each qualifying year is the current state pension full payment divided by 35 years, then multiplying the amount by the number of extra qualifying years since April 6, 2016.

For example, someone given a starting amount of £140 a week but worked for five years after April 6, 2016.

Each extra year of National Insurance Contributions adds about £5 a week to the new State Pension.

You can add qualifying years until either your State Pension meets the full new State Pension amount (£175.20 a week) or until you reach State Pension Age, whichever falls first.

The new starting amount is £175.20 divided by 35, which is £4.70 a week. Multiply this by five (£23.48) and add this amount to the £140 a week starting amount to give a new starting amount of £163.48.

Extra years worked after 2016-17 will not increase the new State Pension if an expat already has 35 qualifying years by April 5, 2016.

Protected payments

If your starting amount is more than the maximum new State Pension of £175.20 a week, the difference between them is a ‘protected payment’ and added to the new State Pension.

No NIC payments before April 6, 2016

Expats starting NIC payments after April 6, 2016 will have their state pension entitlement worked out under the new State Pension rules.

The calculation is simply the full current state pension divided by 35 multiplied by the number of national insurance qualifying years.

If an expat has 25 qualifying years, the calculations is £175.20/35 x 25 = £125.14.

Adult Dependency Increase

The Adult Dependency Increase (ADI) was scrapped on April 6, 2020. The money was available to pensioners with a financially dependent spouse.

Some pensioners can replace the cash if they claim pension credit or universal credit.

Deferring the State Pension

British expats who want to boost their retirement income can go back to work and pick up extra state pension payments as well.

State pension rules allow anyone to defer on payments – and to receive a generous uplift when they start again.

Unfortunately, few expats know about the loophole and continue to take the cash while working, which can leave them financially worse off.

Only expats in European Economic Area (EEA) countries, Switzerland, and countries with reciprocal social security agreements with Britain can defer the State Pension. Although Canada and New Zealand have reciprocal agreements with Britain, expats there cannot defer their State Pension.

How does deferring the State Pension work?

The British government rewards state pensioners for not drawing their money by paying interest on accounts put on hold.

The interest rate for pensions that started before April 6, 2016, is 10.4% a year. Interest is paid at 5.8% for pensions starting later. The rates are far better than taking the money and leaving the cash in the bank.

The catch is expats can only stop and start their state pension once, so they should take care over triggering the pension payment holiday.

For pensions paid at 10.8%, the holiday is worth £670 for every year the state pension is unpaid, while for those paid at 5.8%, the reward drops to £468.

The Department of Work and Pensions works this out as 1% for every nine weeks the pension is deferred.

The money awarded for deferring the state pension is paid as a one-off bonus or as higher weekly payment if the pension started paying before April 6, 2016.

For newer pensions, the extra is paid with the regular state pension amount.

The payment also carries over to spouses of deceased state pensioners, who automatically inherit their partner’s payments after they die. The money is paid with the regular payment.

How To Top Up Your State Pension

If you have missed some vital years that mean your state pension is less than expected, do not despair because you can buy a top up to fill the gaps for any missed years.

Men born between April 6, 1945 and April 5, 1950 and women born between April 6, 1950 and April 5, 1952 can buy extra qualifying years with voluntary contributions.

The cost is £741 a year for each complete year bought. You may not need to pay for a whole year if you have already paid some contribution or have some credits s during that year.

What if I am on benefits?

Voluntary contributions may not be the best choice. Paying to increase the state pension may see some other income-related benefits reduce. The result would be spending to get more pension only to replace money received from another state source.

Improving the state pension could also mean paying more income tax if your joint pension and other earnings come to more than the personal income tax allowance (£12,500 for 2020-21).

Can expats make voluntary contributions?

Expats who are not working can make voluntary contributions if they have lived in the UK for three years in a row or paid three years of National Insurance Contributions.

Working expats are subject to the same three-year rules as non-working expats but must have worked in the UK immediately before leaving.

Expats can pay voluntary contributions if they have reached State Pension Age and have qualifying year gaps that reduce their State Pension.

Claiming a State Pension from different countries

You can receive a state pension from many different countries if you have contributed according to the rules of the system. Indeed, it is something that an increasing number of people are doing nowadays as they tend to move around more often than they did in the past.

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3 COMMENTS

Please correct the misinformation in this article, state pensions in Canada and New Zealand ARE on the frozen list. I should know as I lived in Canada for 12 years, and for part of that time a retiree, after working since age 16 in UK and paying NI. This outrageous scandal affects around 1.1 million UK retirees and is allowed to go on year after year. These seniors have paid for their pensions under the same terms as everyone else and the UK is the only member of the OECD to steal their own seniors pension money. It’s about time this blatant discrimination and injustice was ended.

Please explain in what currency I will receive my pension if I do not live in the UK and I am entitled to a pension. I have a pound account in a bank in the country where the earnings in pounds were paid

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